Wall St drops 1 percent as commodity losses hit stocks

By IBT Staff Reporter On 05/17/10 AT 1:24 PM

U.S. stocks dropped more than 1 percent on Monday as steep slides in commodity prices hit energy and materials shares, while below-forecast data gauging New York factory activity dented the economic outlook.

Persistent worries about the euro-zone debt crisis, which analysts say threatens to hurt the global economic recovery, also fueled bearish sentiment, and a Chinese leading indicator showed growth may have already peaked in its economy.

Shares of Exxon Mobil dropped 1.8 percent to $62.47 while oil futures in New York were down $1.69 at $69.92 a barrel on worries about demand resulting from a European slowdown. An index of oil shares slipped 2.6 percent while an energy-based exchange-traded fund fell 2.9 percent.

There's this dark cloud of Europe that hangs over the stock market. Until that clears, I don't think it's going to be easy for the stock market to make much progress, said Hugh Johnson, chief investment officer of Johnson Illington Advisors in Albany, New York.

The Dow Jones industrial average was down 141.93 points, or 1.34 percent, at 10,478.23. The Standard & Poor's 500 Index was down 16.31 points, or 1.44 percent, at 1,119.37. The Nasdaq Composite Index was down 32.02 points, or 1.36 percent, at 2,314.83.

The New York Federal Reserve's index of manufacturing activity in New York State continued to grow in May, but at a slower pace and came in far below forecasts.

Shares of manufacturers tumbled, with Caterpillar , down 3.3 percent at $62.75 and ranking among the heaviest weights on the Dow.

Losses accelerated at midday as commodity prices extended losses. Copper for July delivery plunged 6.8 percent on the New York Mercantile Exchange's COMEX division.

Shares of major U.S. home improvement chain Lowe's Cos fell 3.6 percent to $25.14 after giving a disappointing profit forecast for the year. The Dow Jones U.S. home construction index slid 3.2 percent.